how much time to allocate for layover in Frankfurt?

I would definitely recommend Lufthansa over Air France any day - Air France did something very underhanded one of our last trips and I will never fly with them again. A 3.75 hour layover sounds just fine - gives you a bit of room if the plane is a little late and enough time to visit the facilities, have a walk and something to eat!
Made a connection through Frankfurt last October - it was tight (i.e. went directly from one plane to another - no stopping!) and it took about 45 minutes, so unless the airport is unreasonably understaffed and/or overwhelmed, I would think 2:20 minutes would be sufficient especially if you are checking through your bags. Immigration took about 20 minutes and seemed efficient and well staffed. Overall was very pleased with Lufthansa - efficient, great communication and I thought the flight crew on all legs was very good.
Will definitely fly with them again!!

For the shortest time in the air, and reducing the time and stress of making a connection (which you are already worrying about), I'd reconsider that Air Canada Rouge flight non-stop from Venice to Toronto. At least in economy, the budget aspects of Rouge are not drawback enough to keep me away from a more convenient and just about as comfortable ride back to YYZ. Take or rent a tablet to see movies; carry a good book; plan a bag lunch. Worth it for the positives of non-stop travel. In my limited experience, Rouge cabin crew are young and cheerful.

2 hrs 20 min should be plenty of time to make your connection. Especially since you won't have to deal with the extra security of US bound flights. Providing, of course, that your first flight isn't significantly delayed.

March 2017 we had a 2 hour connection in Frankfurt to Vienna (United to Lufthansa) that went smoothly. (I will admit to being nervous about it beforehand.) Well-planned airport!
We have flown out of FRA several times.

Frankfurt is my number one choice for making a connection, always an efficient and easy process. 2 hours is about right, allows me time to get a snack and stop at their wonderful book store, The Pocket Shop.

Be aware that Air Canada Rouge is not the same as Air Canada. The same plane will have significantly;y more seats. While a seat pitch of 30" can be tolerated for a flight of a couple hours, that is not tolerable for most people for an 8-9 hour transatlantic flight.

2'20" should be fine in Frankfurt. Since both flights are Lufthansa you will remain in the same terminal. it may be large, but it is easy to find your way around. And the staff will be very helpful if time becomes a consideration. We have always been in the 90 minute to 2 hours schedule for our connection for our return home, and have never been pressed for time.

Thanks -- this is really helpful! Has anyone purchased the extra leg room economy seats of Lufthansa? One of the people in our group had a knee replacement a few months ago, and I'm wondering if it might be worth it for her? But I don't want to waste money if it's not a good value!

We get our economy seats at online check-in. We have always been able to get an acceptable pair (our flight is on an A340 with 2-4-2) on the side, and have even caught bulkhead. I am 5-10+ and have never had an issue of feeling squashed in their regular economy seats. Your friend’s miles may vary.

I flew Rouge last Fall, and was not overly impressed.
Lufthansa and Air France are much better.

If your friend has a new knee the extra room on a flight of that duration will be well worth it. I’m 5’6” on a good day and always spring for the economy plus (or whatever the particular airline calls it) as I have sciatica and need to periodically stretch out that leg. Beware: once you do it you’ll find it difficult to fly standard economy again.